Bylaw 1.7(a)(4-3) of this blog's charter states… 'A topical post relevant to retirement must be published at least once a year'.
Ah, yes. It’s that time again. As always, my apologies to international readers, whom I assume must scratch their heads at the financial sausage-making that is American retirement planning. I’ll fill all of you in on a little secret: We don’t really understand what we’re doing either. But once every three months we get up on a chair and scream “No-load mutual funds!” at the top of our lungs before sitting back down with a Sudoku magazine.
Alert readers might notice that I finally made headway with those bean counters at HQ. It took a few memos of justification and also some Zoom calls (which in hindsight were needlessly contentious), but I’m nevertheless happy to report that I succeeded in enacting a change in this blog’s charter. As shown at the top, your humble blogger is now responsible to write only one post related to retirement per year, down from the previous requirement of three. That’s less head-scratching for me, and less coffee consumption for you. Win-win!
As we now enter the second half of this year, I am cognizant of the clock ticking down to the last months of my receiving a special supplement in my pension. This supplement was the catalyst for my taking early retirement seven years ago. It lasts until I turn 62, which will be this coming December. In theory, the supplement is designed to be a bridge to the start of social security.
But while I can start social security at that age, and thus replace the money that I’ll be losing in my pension, it doesn’t mean that I should. Doing so for me personally would be foolhardy given that there is an 8% delayed retirement credit added to your eventual monthly payout for each year that you hold off starting social security payments, up until age 70. That’s a big incentive to wait.
It’s an important decision that for most people ultimately comes down to one’s own circumstances. Your health plus the amount of savings you’ve saved up are the key drivers in choosing the right time to start. No two people’s situations are usually the same.
In my case, I plan to delay starting social security until I reach my full retirement age (age 66 and 10 months) and more likely even beyond that date. Our financial advisor currently has the start date pegged in his fancy-schmancy spreadsheet for when I turn 70. Of course, In not-so fine print at the bottom I’ve also noticed that he has, “fees subject to change.” Even he can’t make up his mind.
In any event, next January my monthly pension payment will be reduced. On a tangential note, this blog will transition at that time to a Go Fund Me page. And here you were thinking that all this Grade A humor would continue to be complimentary forever, eh?
What doesn’t change, though, is the alimony obligation I have each month to my ex-wife. The terms of our divorce decree are that she receives alimony for life unless she remarries (if there are any single men reading this who have personal savings and a live pulse, please reach out to me. We should talk).
Shortly after I retired, I was fortunate to have negotiated a 50% reduction to the original amount specified in the divorce decree. However, with my now facing a smaller pension in six months, I took it upon myself last month to reach out to her to see if I could negotiate a further reduction that would eventually culminate to an ending of alimony payments at the start of her own social security.
As a sweetener, I added some upfront cash with a number, followed by a comma and a few zeros at the end.
As a second sweetener, I added more cash but with a slightly lower number, followed by a comma and still a few zeros at the end.
I also offered to have all of this written up by a lawyer at my expense.
I thought myself creative. I thought myself reasonable. I even thought myself generous!
My ex-wife unfortunately thought none of those things. She cannily had her attorney write me a long message explaining in great detail how I am neither creative, reasonable, nor generous. I further learned how fortunate I am that the earlier negotiated alimony reduction actually saves me quite a bit of money, and that it will CONTINUE to save me money going forward. George Orwell couldn’t have put it any better. After I finished reading, I stood up on a chair, only this time rather than announcing my love of no-load funds, I alternatively shouted my allegiances to Big Brother. All it took was having things explained to me, after all.
Luckily, my years of saving is tossing me a lifeline. As outlined in an earlier retirement update, I started distributions earlier this year from my 401(k). While the acclaimed 4% rule of withdrawals isn’t exactly allowing for wine store purchases from that top row of Bordeaux bottles, I can probably choose one from the middle row of Columbia Valley vintages, while at the same time still make the alimony payment. If the creek don’t rise…
You can’t fault a fella for trying. Well, okay, obviously someone in this story obviously did. But there’s still something to be said for tossing a good ‘ol Hail Mary pass now and then. Now if you’ll excuse me, for some reason I have this inexplicable urge to buy a few Powerball and Mega Million tickets.
Until next time…